Unit 1.3.2 Flashcards
What are buyers and sellers?
- Buyers: People or businesses that want to purchase something. They create demand
- Sellers: People or businesses that want to sell something. They create supply
What is a market?
A market is any medium in which buyers and sellers interact and agree to trade at a price
What is demand?
The amount of good and service that people are willing and able to buy at a given price at a given time
What is market demand?
Refers to the sum of all individual demand for a particular good or service. Has to be effective
What is the relationship between price and quantity demand?
P ↓QD ↑
QD ↑P ↓
What is a demand curve?
The relationship between price and quantity demand. The vertical axis shows the price and the horizontal axis the quality demanded. The demand curve slopes down from left to right
What is a movement along the demand curve?
A change in price
Explain the shift of the demand curve
- Left (decrease)
- Right (increase)
What causes the demand to shift?
- Changes in tastes and fashions
- Changes in income
- Changes in population
- Advertising
- Changes in the price of other goods
- Substitutes and complements
What are substitutes and complements?
- Substitutes: goods that can replace another. If the price of the substitute increases the demand curve for the original good shifts to the right
- Complements: goods that are consumed together. If the price a complement decreases the demand curve for the original good shifts to the right
What is supply?
The amount of a good or service that producers are willing and able to supply
What is market supply?
Refers to the sum of all individual suppliers of a particular good or service. Has to be effective
What is the relationship between price and quality supplied?
P ↑QS ↑
QS ↓P ↓
What is the supply curve?
The relationship between the price and quality supplied. The vertical axis shows the price and the horizontal axis the quality demanded. The supply curve slips up from left to rihht
What is the movement along supply curve?
A change in price
Explain the shift in the supply curve
Left (decrease)
Right (increase)
What causes the supply curve to shift?
- Change in cost
- Change in the size of the industry
- Imposition of a tax
- Natural phenomena
- New technologies
What is the equilibrium point?
The quantity demanded is the same as the quantity supplied
What are market forces?
Things that effect supply and demand i.e inflation recession
What is market orientation?
Achieved when a business focuses its activities products and services around the wants and needs of the customers
Name the benefits of market orientation
- Gives a business competitive advantage
- Brand loyalty may be achieved
- Satisfied customers may recommend product or service
- Increased brand loyalty makes it easier to charge a higher price
